Westpac’s proportion of commercial property lending to gross loans has fallen from a peak of 13 per cent in December 2008 to 9 per cent in September this year.

However, the level of stressed property has increased.

Stressed property, which includes those on watch lists, those with more than 90 days past due as well as impaired assets, has increased 4.3 per cent for the group.

While that is above average stress for property, Westpac said the majority of stressed property exposures had been identified early and that meant the rate of increase was reducing compared to fiscal 2009.

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“In corporate and commercial lending, the commercial property sector has been the dominant source of stress although the strengthening environment has led to an improvement through the year," the bank said.

Separate to the commercial property sector, Westpac’s mortgage lending is up 12 per cent.

Westpac’s lower property exposure comes a week after National Aust­ralia Bank declared it had reduced its exposure by more than $8 billion since March.

NAB had reduced its overall commercial property-related loan book by $3.1 billion, or 4 per cent, in the six months to September last year.